Managing conflict of interests between headquarters and their subsidiaries regarding technology transfer to emerging markets - a framework

This paper studies intra-organizational conflict between headquarters and its foreign subsidiary regarding technology transfer to emerging markets with a lack of protection of intellectual property rights. The purpose is to: (i) develop an understanding when conflict exists; (ii) suggest how the conflict can be structured; and (iii) present conflict design alternatives that maximize the multinational corporations' interest over the interest of the subsidiary. This article proposes that subsidiary self-interest in technology transfer situations may only be detrimental to the overall success of the MNC if products are easy to copy, the host environment has the technological and managerial capabilities to expropriate and the technology represents a competitive advantage. In situations where it is likely that the technology transfer is vulnerable to expropriation headquarters is advised to establish an independent pool of information of expropriation risks, to build trust by starting with small scale technology transfer and to signal career perspectives to subsidiary managers. As a result, the creation of a cooperative climate reduces subsidiary opportunism and information asymmetries. (c) 2005 Published by Elsevier Inc.